Philips spearheads the Circular Economy with firm 2020 pledge

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Davos - At this year’s World Economic Forum Annual Meeting in Davos, Switzerland, Philips CEO Frans van Houten cemented the company’s 2020 commitment to the Circular Economy by pledging to take back and repurpose all the large medical systems that its customers are prepared to return to it. This means that Philips will actively pursue the trade-in of equipment such as MRI, CT and Interventional X-ray systems and take full control to ensure that all traded-in materials are repurposed in a responsible way.

Such actions are necessary because the United Nations Resource Panel predicts that globally the manufacturing sector will need to extract 180 billion tons of the Earth’s natural resources every year by 2050, almost double what it does today, which is not sustainable.

The challenge, which was highlighted at Davos in the Circle Economy ‘Circularity Gap Report’, is to shift from today’s linear ‘take-make-dispose’ model, in which less than 10% of the raw material is recycled, to a circular ‘make-use-return’ paradigm – the so-called Circular Economy. Widely regarded as essential to meeting the United Nations Sustainable Development Goals, the Circular Economy aims to keep products, components and materials at their highest utility and value at all times throughout the make-use-return and repurposing cycle.

We firmly expect the circular economy to replace the traditional ‘take-make-dispose’ scheme. So at Philips we aim to take back all capital equipment from our hospital clients.

Frans van Houten

CEO Philips

Through his co-chairmanship of the PACE (Platform for Accelerating the Circular Economy) initiative, Philips CEO Frans van Houten is championing the necessary change, spearheading its implementation, and assembling a coalition of like-minded companies to make similar capital equipment pledges. Philips will continue to expand its own pledge until it includes all its professional equipment. Other companies joining the initiative by making their own business-specific pledges can be found here.

“We firmly expect the circular economy to replace the traditional ‘take-make-dispose’ scheme,” said Frans van Houten. “So at Philips we aim to take back all capital equipment from our hospital clients. What’s more, we expect this to become a win-win business model, because there is much residual value to recover. We continuously endeavor to ‘disrupt ourselves’ by rethinking and redesigning the way we do business to contribute to a better world.”

Innovative service models, smart upgrade paths, and product take-back and remanufacturing programs are not only good for the planet and improving people’s lives, they also make good business sense. As part of its ‘Healthy people, Sustainable planet’ strategy, Philips aims to deliver 15% of total revenues from circular solutions by 2020. Over the last decade, it has returned some 7000 tons of refurbished medical imaging equipment to the market and incorporated 6000 tons of recycled plastics into its new consumer products.

Frans van Houten’s commitment to promoting sustainability and the Circular Economy has won him a Fortune Award for Circular Economy leadership, which was presented to him at WEF 2018.